Date Enacted: July 8, 2014
Date Effective: January 1, 2015
The new year ushered in increased bond amount requirements for contractors in Alaska. The bill includes general contractors with residential contractor’s licenses, mechanical contractors, specialty contractors and home inspectors. Changes to Alaska SB 193 also closes loopholes, and resolves issues caused by outdated coverage requirements.
With these updated rules and increased bond amounts, you may be wondering how to get your contractors license bond. Read on if you’d like to learn about this, and check out more of the bill’s revisions in detail.
Bond Amounts Increased
In the past, Alaska’s bond amounts have been too low to cover claims by wronged parties. Many of these bond amounts haven’t been increased since the 1970s and 1980s, thus causing a deficit between coverage and actual expenses incurred when when contractors did not fully meet their obligations.
The changes increased license bond amounts for general contractors to $25,000 from the previous requirement of $10,000. General contractors who do work solely on residential properties, in other words those of you who have a residential contractor endorsement under AS 08.18.025, will need a $20,000 bond in order to operate. Specialty contractors, for example HVAC and electrical contractors, need to carry a contractor’s bond of $10,000. This is an increase from the original $5,000 required financial security.
Small Projects Bond
Alaska legislators have defined smaller projects as singular projects, which are not part of another project, valued at less than $10,000 including materials and labor. Essentially, the rule is meant to prevent evasion of a higher bonding requirement by splitting a larger project just to carry a smaller bond.
If you work on these types of projects, you’ll need the same bond amount as before.This leaves the compulsory contractors license bond amount at $5,000.
Projects Outside the Protection of Insurance
The bill acknowledges that some jobs do not require the protection of insurance due to their smaller nature and the modest liability and damage risks. Specifically, if the cost of the job is less than $2,500, there is no insurance needed. In essence, this allows non-contractors to perform work like interior painting without the full requirements and legal obligations of contractors that perform larger work.
New Bonding Options Introduced
The changes to Alaska bonding law also bring new options for contractors. In addition to utilizing contractor bonds, contractors can now file a cash deposit or other type of negotiable security with the commissioner that oversees their type of work.
This helps to provide more options for contractors that may have circumstances preventing them from getting bonded, or for those who would prefer an alternative to contractor bonding.
Steps to Obtaining Your Contractor License Bond
Now that you know about the changes to Alaska’s SB 193, you may need to know how to obtain a contractor’s license bond.
Step one is to do a search of available bonding agencies. From there, check ratings and reviews. It’s always a good idea to make sure the agency you’re working with has an above average reputation.
Next, complete the online application (if they have one), or whatever type of application they might provide. Once you’ve done this, you should get your financials together as the bonding agency may use these documents to assist in determining the amount of the bond you’ll need.
It’s also a good idea to do things like pay down credit cards, since your credit score will be used to determine the price of your premium.
Once this is done, you’ll be on your way to getting bonded and starting work!
If you have any questions about getting bonded, or would like to start your application right away, simply get in touch with us at JW Surety Bonds.
Check out the full revised Alaska Contractors License Bond Bill for more details.
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